Brian Walton's news and commentary on the St. Louis Cardinals (TM) and their minor league system

Is reducing the Cardinals payroll unreasonable?

An overly-simple measure of quantity (rather than quality) of a baseball organization’s financial commitment is the oft-quoted total salary of the players that make up their major league roster.

There are many variations to these numbers, depending on whether one is looking at the total salaries ofthe players regardless of which club is actually paying for them (hello, Jim Edmonds!), the timing of the view (start or end of season), how compensation elements such as salary deferrals and incentives are accounted for and more.

A changing 2009 picture

Yet, using any measure, current course and speed, the 2009 St. Louis Cardinals are currently on a trajectory to open the season with a lower total salary commitment than they expected last fall.

In October, general manager John Mozeliak told me to expect a 2009 payroll “north of $100 million”. As has been reported time and time again, things have changed.

Now, in a report I first referenced here the other day, Yahoo Sports is forecasting a $91 million total for the ’09 Cards, considerably below the $99.6 million they quote for 2008 (a season-opening count as well).

Who’s spending more and who’s spending less?

I am not here to nitpick the numbers, but I do want to look into them, as there is a lot more than first meets the eye. Fortunately, a regular on the Scout.com message board, “Oquendo11”, already did much of the initial research.

Using the Yahoo series of articles as a consistent guide, with 22 teams having been covered so far, Oquendo noted that the number of clubs apparently increasing payroll in 2009 is equivalent to the ones cutting back.

I extended that several steps further to add their ranking from 2008. This can help us better understand which clubs are moving in which direction. In other words, are the big spenders planning to spend more while the small spenders are spending less?

2009 vs. 2008

2008 rank

Avg rank

Avg 2008 $

Increase (9)

Chicago Cubs

8

Philadelphia

12

Houston

14

Cincinnati

18

Baltimore

22

Kansas City

24

Oakland

28

Tampa Bay

29

Florida

30

Avg ’08 rank/$

21

$67.7 M

Decrease (9)

New York Mets

2

Detroit

3

Boston

4

LA Angels

6

Seattle

9

Atlanta

10

St. Louis

11

Toronto

13

Pittsburgh

27

Avg ’08 rank/$

9

$117.7 M

Flat (4)

Texas

21

Washington

26

NY Yankees

1

Milwaukee

15

Not included (8)

Chi White Sox

5

LA Dodgers

7

Cleveland

16

San Francisco

17

San Diego

19

Colorado

20

Arizona

23

Minnesota

25

Meet you in the middle

Nope, it is just the opposite. The two extremes are coming in toward the middle. The clubs that were spending the most in 2008 are the ones cutting back in 2009 while the lower-spending clubs are generally planning increases.

The average rankings illustrate this even better. The cutting teams averaged ninth in payroll last season or just into the top third, while the increasers averaged 21st in spending across MLB last year, just into the bottom third.

Taking the rankings even closer to reality, last season’s ninth-highest spending team dropped $117.7 million on players, while the 21st-ranked club spent a whopping $40 million less. Even with an increase on 2009, the 21st ranked club would have a long way to travel to come anywhere near reaching parity.

To make sure I am clear, what this shows is that in terms of their 2009 payroll planning, the Cardinals are behaving very much like the other clubs in their financial ballpark.

Consider how the money is being spent

I want to reinforce one point that has been made over and over again. There is no sure correlation between spending more money and winning more championships. The top payroll in baseball year after year comes from the New York Yankees, a club that missed the playoffs last season and hasn’t won a World Series since 2000.

If one remains unconvinced, just look at the 2008 Seattle Mariners. They became MLB’s first-ever $100 million payroll club ($117.7 million at #9) to lose 100 games (101, to be exact – second-worst in baseball). It’s clearly not how much you spend as much as it is how you spend it.

If disgruntled Cardinals fans want to engage on that point – how the player payroll money is spent – then I can understand completely.

Another reality that is difficult to measure is the impact of a stronger farm system. Common sense tells us that a rookie will always have a lower salary than a veteran. What is far less clear is what percentage of the money saved by replacing an older, more expensive player with a younger, less costly one should be plowed back into upgrading another position at the major league level. Also, should that be a linear relationship, i.e. does it change based on the number of youngsters vs. veterans?

Some fans would say “100% of money saved should always be spent on other major leaguers, of course!” Yet the owners are in business to make money. Why should they not be entitled to reap some of the benefits from efficiencies gained via their smart investments in player scouting and development?

What if a club decides to spend more in the international market or on draft bonuses? Do fans think that is new money or realistically, does it have to be reallocated from somewhere else?

I don’t pretend to know the proper mix or how to measure it, but I am pretty sure that the folks on the far ends of either side of this equation – the “alls” as well as the “nothings” are too extreme for reality.

E:R can neither be fully understood nor ignored

Expanding this one step further, let’s consider the revenue side of the equation. We do not know the actual revenue the Cardinals generate each year, though respected industry watchers like Forbes do their best to make educated estimates.

The Cardinals are clearly signaling they expect down revenue in 2009. Given all that is going on around us in this world, it is not a surprising conclusion to draw.

If you don’t think there are scores of Cardinals fans working for these affected companies – Midwest employers like Caterpillar, John Deere, The Home Depot and Target – then you are hopelessly out of touch.

Let’s face it. For most of our country, baseball is a luxury, not a necessity. It is entertainment, not sustenance. When times get tough, we trim the fat before hitting the bone.

Here is a question I challenge everyone to consider.

In any endeavor, including running a baseball team, isn’t it wise to try to keep revenue and expense in balance?

Where can they cut?

One can certainly debate how a club goes about achieving savings. The Arizona Diamondbacks, for example, ranked 23rd in player payroll last season, recently laid off 31 front office personnel, or 9% of their staff.

Is that better for the organization than cutting player expenditures? How could we ever answer that from our perspective? Instead we have to assume ownership carefully weighed their alternatives and did what they thought was best for the organization overall.

One can also debate when cutting expense finally hits the bone – leading to a further decline in revenue and sending the organization into a financial death spiral.

Yet I cannot see how a reasonable, rational person cannot appreciate the most basic financial relationship presented above – if take in less, then I should spend less. The only reason to deviate is if I can determine a valid way to make more by spending more.

Whether we consider it this way or not, the responsible ones among us follow this simple E:R guideline in our own daily lives. Why should we expect others to act differently?

In conclusion

As noted above, the real challenge is in how the Cardinals actually execute their revised 2009 game plan, both on their financial spreadsheets and on the field of play.

In the meantime, let’s see if the club makes any further investments as camp begins and prices on players drop. Let’s see if the younger players step up and contribute. Let’s see if they decide to upgrade the team in-season if they contend in 2009. Let’s see if the Cardinals can weather the economic downturn or if fans stay home in record numbers.

In closing, I am not suggesting that everyone should agree with ownership and management. I disagree with them frequently on any number of specific issues.

However, I am saying that is both unfair and inaccurate to assume that a cut in payroll also represents a move to increase profits and a reduced commitment to putting a winning product on the field.

Those who still don’t get it need to open their eyes and look at what is happening all around them.